Nikkei firm after setting 2-year high, advance slowed by yen's bounce

TOKYO, Oct 4 (Reuters) - Japan’s Nikkei rose to two-year highs, cheered by an upbeat outlook for the global economy though gains were trimmed by the close as the yen bounced against the dollar.

The day’s biggest mover was Japan Display, which rallied on a report that it had developed methods to mass-produce OLED panels at a low cost.

The Nikkei ended Wednesday 0.06 percent up at 20,626.66 after reaching 20,689.05, a high last touched in August 2015. The broader Topix closed effectively flat at 1,684.56 after rising to 1,688.59, also a top last seen in August 2015 .

Stocks drew support from Wall Street where all three major indexes closed at yet another set of record highs overnight.

Equities have recently advanced amid signs of strength in large economies including the United States and Japan, with a modicum of calm in the Korea Peninsula easing investor risk aversion for now.

Data released so far this week showed Japan’s business mood at a decade-high while a measure of U.S. manufacturing activity surged to a 13-1/2-year high in September.

“Japanese stocks are rising as part of a broader ongoing trend in global equities generated by an improvement in economic prospects,” said Soichiro Monji, chief strategist at Daiwa SB Investments.

“Apart form the Bank of Japan, the major central banks are looking to exit easy monetary policies and investors shifting out of bonds into stocks are also seemingly supporting equity markets.”

Japan Display rose as much as 29 percent after the Nikkei business daily reported the company had developed a way to mass-produce lower-cost organic light-emitting diode (OLED) screens and would start as early as in 2019.

The Nikkei said Japan Display had started approaching dozens of potential investors including Sony Corp and Canon Inc to raise 100 billion yen ($888 million) for mass production.